What Does the UN Forecast for India's Economic Growth in 2026 and Beyond?
India's Economic Outlook According to the UN
United Nations: A recent report from the United Nations indicates that India's economy is expected to expand by 6.4% this year and reach 6.6% in 2027.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released this report on Monday, highlighting that the economies in South and South-West Asia are projected to grow by 5.4% in 2025, up from 5.2% in 2024, largely due to India's strong performance.
India's growth is anticipated to rise to 7.4% in 2025, driven by robust consumption, particularly in rural areas, along with reductions in goods and services tax rates and export preparations ahead of U.S. tariffs, as noted in the report titled Economic and Social Survey of Asia and the Pacific 2026.
However, the report also mentions that economic activities in India slowed in the latter half of 2025, with a 25% drop in exports to the U.S. following the implementation of 50% tariffs in August 2025. The services sector continues to be a significant contributor to growth.
The forecast suggests a growth rate of 6.4% for India in 2026 and 6.6% in 2027, with inflation rates projected at 4.4% this year and slightly lower at 4.3% next year.
The report highlights a decline in foreign direct investment (FDI) inflows to developing economies in Asia and the Pacific amid ongoing trade tensions and geopolitical uncertainties. After a modest increase of 0.6% in 2024, FDI fell by 2% in 2025, despite a global increase of 14%.
India, along with Australia, the Republic of Korea, and Kazakhstan, attracted significant greenfield FDI, with announced investments of USD 50 billion, USD 30 billion, USD 25 billion, and USD 21 billion, respectively.
Additionally, personal remittances from Asian and Pacific workers abroad have continued to rise, helping to mitigate the effects of challenging domestic employment conditions.
In India and the Philippines, approximately 40% of these remittances are allocated for essential expenses, including healthcare.
However, as the largest recipient of remittances globally, amounting to USD 137 billion in 2024, India may face challenges due to a new 1% tax on all remittances imposed by the U.S. starting January 2026.
The report also references estimates from the International Renewable Energy Agency (IRENA), which indicate that there are around 16.6 million green jobs worldwide, with an annual job creation rate of approximately 0.8 million from 2012 to 2024, reflecting a 7% annual growth.
Among these jobs, 7.3 million are in China, 1.3 million in India, and 2.5 million across the rest of Asia, representing 44%, 8%, and 15% of the global total, respectively.
The report emphasizes that governments can utilize the transition to a sustainable energy economy to foster new domestic industries and build supportive communities.
It suggests that public investment and targeted industrial policies can expedite the development of sectors such as renewable energy manufacturing, grid development, storage solutions, and green industrial clusters.
India's production-linked incentive scheme is highlighted as an example of how macroeconomic policies can promote green industrial growth by incentivizing domestic production of solar panels, batteries, and green hydrogen, thereby reducing reliance on imports while creating new industrial stakeholders invested in the transition.
The report concludes by noting that targeted industrial policies across developing economies in Asia and the Pacific are being employed to enhance clean technology manufacturing and accelerate the energy transition, including India's initiative for high-efficiency solar modules and China's strategic subsidies for electric vehicle battery production.